2021: Why has Buffett asked the trustees of his estate to invest in index funds?

BECKY QUICK: As a follow-up to that, Gerald Silver writes in. He says, “The trustees of your estate — I believe you’ve directed the trustees of your estate to invest substantial assets into the index fund. Isn’t that a vote of no confidence to your managers?”

WARREN BUFFETT: Well, no, because we’re talking about way less than one percent of my estate. (Laughs)

And one thing I’m going to do, incidentally — I mean all rich people get advised by their lawyers to set up trusts so that nobody can see your will and all that sort of thing.

My will’s going to be public record. And you can — you’ll be able to check at some point whether I’ve been telling you the truth (laughs) about what is going to get done.

But 99.7%, roughly, of my estate will either go to philanthropies or to the federal government.

And before it does it, I think Berkshire is a very good thing to hold. But for a given individual, particularly my wife, I just think that having a tiny fraction — which is all it takes for her to do very well for the rest of her life — I just think that the best thing to do is buy 90% in an S&P 500 index fund.

Now, the index fund people, naturally, have started — over time — they market more and more products that go to other indices and everything. So, they’re really starting to say to the American public, they’re saying, well, you can pick what continent to invest in, or you can pick what industry (laughs) and we’ll sell you something for that.

And when they just have gotten through telling them, you know, you really don’t know anything about stocks, just buy the whole index. (Laughs)

So, I name the 500 index as one.

But it’s a tiny portion, but it will be her livelihood, and she’ll have all the money she needs, and way beyond it, and that’s that.

But I don’t mind having the 99.7% — a large portion of it — assuming the laws are the same as now — that go to philanthropy, to be kept in Berkshire until they finally are disposed of.